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refinance questions
Posted on 5/30/13 at 7:47 am
Posted on 5/30/13 at 7:47 am
so quicken loans bought out my loan. they are trying to get me to refinance. current balance is like 100k.
right now I am 2 years into a 15 year mortgage with 4.25% rate. note is like $1050 including property tax/insurance.
They proposed a 30 year at 3.75% and I can just pay extra each month if I choose, with a $3600 closing cost. note would be $600
They also proposed a 10 year at 3.5% and $3000 closing cost. note would be $1155
Closing costs seem a little high to me. I would only save a few thousand in interest if you include the closing costs. Can I get them to reduce or drop the closing cost any?
right now I am 2 years into a 15 year mortgage with 4.25% rate. note is like $1050 including property tax/insurance.
They proposed a 30 year at 3.75% and I can just pay extra each month if I choose, with a $3600 closing cost. note would be $600
They also proposed a 10 year at 3.5% and $3000 closing cost. note would be $1155
Closing costs seem a little high to me. I would only save a few thousand in interest if you include the closing costs. Can I get them to reduce or drop the closing cost any?
This post was edited on 5/30/13 at 8:19 am
3
Posted on 5/30/13 at 7:59 am to diat150
quote:
right now I am 2 years into a 15 year mortgage with 4.25% rate. note would be $600
They proposed a 30 year at 3.75% and I can just pay extra each month if I choose, with a $3600 closing cost. note would be $1155
They also proposed a 10 year at 3.5% and $3000 closing cost.
I am confused by your post. What is the "note would be $600" referring to? If you changed from a 15 year at 4.25 to a 30 year at 3.75, is seems like you are saying your note would go up from $1050 to $1155.
I guess you are saying $600 for 30 year and $1155 for 10 year, but it isn't clear.
This post was edited on 5/30/13 at 8:01 am
Posted on 5/30/13 at 8:00 am to diat150
Leave it alone if you are satisfied.
If you are wanting to free up monthly cash flow for another opportinity, look into your refinancing options. Check other lenders too.
If you are wanting to free up monthly cash flow for another opportinity, look into your refinancing options. Check other lenders too.
Posted on 5/30/13 at 8:24 am to eelsuee
quote:
am confused by your post. What is the "note would be $600" referring to? If you changed from a 15 year at 4.25 to a 30 year at 3.75, is seems like you are saying your note would go up from $1050 to $1155.
I guess you are saying $600 for 30 year and $1155 for 10 year, but it isn't clear.
sorry, I had that all messed up.
still early.Posted on 5/30/13 at 8:27 am to diat150
quote:
15 year mortgage with 4.25% rate. note is like $1050
$189,000 over loan
quote:
30 year at 3.75%
quote:
note would be $600
$216,000 over loan
quote:$138,600 over the loan
10 year at 3.5%. note would be $1155
Doesn't seem like this is all that difficult of a decision if you plan on staying in the house.
Posted on 5/30/13 at 8:40 am to PurpleAndGold86
quote:
Doesn't seem like this is all that difficult of a decision if you plan on staying in the house.
You can't just add up the interest paid over the life of the mortgage, that only makes sense if you plan to use spare cash by stuffing it in a mattress the entire time.
Example: Suppose you are comparing a 15 vs. a 30. To get a true comparison, you have to compare the cash flow over 30 years for *both* sides. On the 15 year side you look at repayments for 15 years and then investing for 15. On the other side, you look at the 30 years of payments plus 30 years of investing the monthly note difference.
ETA: You also need to account for inflation. $100K of interest saved over 15 years is not the same as $100K saved over 30 years.
This post was edited on 5/30/13 at 8:44 am
Posted on 5/30/13 at 8:43 am to foshizzle
You only have an extra 400 bucks a month. It isn't like you can invest the whole amount at one time.
ETA: I'm also willing to bet a large amount of money that the majority of people that refinance to free up a little extra cash flow aren't investing every dollar that they save.
ETA: I'm also willing to bet a large amount of money that the majority of people that refinance to free up a little extra cash flow aren't investing every dollar that they save.
This post was edited on 5/30/13 at 8:47 am
Posted on 5/30/13 at 9:10 am to PurpleAndGold86
quote:
You only have an extra 400 bucks a month. It isn't like you can invest the whole amount at one time.
You can invest the extra 400 bucks every month. Or in some people's case pay off a credit card much faster.
quote:
I'm also willing to bet a large amount of money that the majority of people that refinance to free up a little extra cash flow aren't investing every dollar that they save.
Probably, but the point of the exercise is to figure out the better choice. The better choice is not limited to just 15 vs. 30, it also involves what you do with the money. By ignoring that you are assuming they're just stuffing it in a mattress somewhere, which they proably aren't doing either.
ETA: For example, suppose they need the extra cash to pay bills. If there truly is no other source of funds then the correct ROI is very high, much higher than you'd get from investing in something. And much higher than the 0% you are using.
This post was edited on 5/30/13 at 9:14 am
Posted on 5/30/13 at 9:14 am to PurpleAndGold86
this is the way i see it.
stay with current loan and add 100 per month to note. $25,500 interest paid and loan finished in 11 years.
30 year loan, pay extra 600 per month, pay $20,141 interest and loan length is 9.5 years
10 year loan, pay $19,596 interest loan length is 10 years.
seems like it would make the most sense to go with the 30 year. If i got in a bind I could just pay the lower note but at the same time I can pay out the loan faster which is what i want).
I am sure they are hoping that I take the 30 year and start wasting the money on other things and pay the note for 30 years.
so do you think I can get them to cut the closing costs down?
stay with current loan and add 100 per month to note. $25,500 interest paid and loan finished in 11 years.
30 year loan, pay extra 600 per month, pay $20,141 interest and loan length is 9.5 years
10 year loan, pay $19,596 interest loan length is 10 years.
seems like it would make the most sense to go with the 30 year. If i got in a bind I could just pay the lower note but at the same time I can pay out the loan faster which is what i want).
I am sure they are hoping that I take the 30 year and start wasting the money on other things and pay the note for 30 years.
so do you think I can get them to cut the closing costs down?
This post was edited on 5/30/13 at 9:16 am
Posted on 5/30/13 at 9:21 am to foshizzle
quote:
You can invest the extra 400 bucks every month. Or in some people's case pay off a credit card much faster.
That is exactly what I just said.
quote:
By ignoring that you are assuming they're just stuffing it in a mattress somewhere, which they proably aren't doing either.
Incorrect. As I just said, most people aren't going to save it. I bet most people that have an extra $400 a month are going to spend it. Obviously that isn't applicable to the disciplined financial geniuses in this forum, but to the other 98% of the world that isn't disciplined enough to save every single spare dime that they have.
The difference in the 15 vs the 30 was 27,000. You would have to be getting an unbelievable return on the first 15 years to make the 30 year option the better option. Keep in mind that after the first 15 years you would be able to invest the entire 1050 each month if the loan was paid off as opposed to only 450 a month during the course of the 30 year loan. Why don't you do the math on that one and let me know what you come up with and then tell me where one would find such a lucrative return on their investment.
Posted on 5/30/13 at 9:25 am to diat150
quote:
30 year loan, pay extra 600 per month, pay $20,141 interest and loan length is 9.5 years
If you have the ability to pay 1,200 a month, then why don't you add 150 a month to the 15 year loan and pay 1,200 total dollars on that option instead of 1,150 like it seems like you were calculating. Calculate how much interest you would pay and when you would be done on the 15 year note paying off 1,200 a month.
And then factor in the closing costs of $3,600 which are very high to begin with. You are having to pay that money up front to essentially have a wash on the amount of interest and length of time to pay the loan back.
This post was edited on 5/30/13 at 9:27 am
Posted on 5/30/13 at 12:10 pm to PurpleAndGold86
They are not offering you anything. You should be able to get a 15 year in the high 2% range depending on your credit, ltv, etc. They want you to refi to make alot of money off of you on back end points. If you go from 4% to 2%, you should be able to make up your closing costs in less than 5 years and save monthly. However, savings on a 15 is never what people think it will be. You could save a few dollars, leave what you pay the same and pay it off early.
Posted on 5/30/13 at 11:10 pm to PurpleAndGold86
quote:
If you have the ability to pay 1,200 a month, then why don't you add 150 a month to the 15 year loan
Because there are investments out there that pay better than the rate of inflation over 15 years.
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